Posted
by
Soulskill
on Friday August 29, 2014 @10:35AM
from the can't-even-trust-the-huge-soulless-corporations-anymore dept.

Rick Zeman writes: The Center for Public Integrity has a comprehensive article showing how Big Telecom (aka, AT&T, Comcast, Charter, Time Warner) use lobbyists, paid-for politicians, and lawsuits (both actual and the threat thereof) in their efforts to kill municipal broadband. From the article: "The companies have also used traditional campaign tactics such as newspaper ads, push polls, direct mail and door-to-door canvassing to block municipal networks. And they've tried to undermine the appetite for municipal broadband by paying for research from think tanks and front groups to portray the networks as unreliable and costly."

It's even worse when the big ISPs are trying to kill municipal broadband in an area they don't serve. Because you can't have the government competing with them in an area that they might, someday, begin to consider serving. Until then, the residents should grovel (over dial-up) at the big ISPs' feet for broadband Internet service.

There is only one reason for the government to step in: make it easier for smaller ISPs to start shop. I'd love to start a small ISP in my area, but it is practically impossible.

Given a few common, yet unproven, assumptions about how markets operate. ISPs operate a lot like utilities in terms of fundamental market behaviors, and the prevalence of natural monopolies. Organizing the structure of the market to allow smaller competitors, to me, is one way a government could help. Not the only way.

Given a few common, yet unproven, assumptions about how markets operate. ISPs operate a lot like utilities in terms of fundamental market behaviors, and the prevalence of natural monopolies. Organizing the structure of the market to allow smaller competitors, to me, is one way a government could help. Not the only way.

Close, but not quite IMHO.

The ISP component does not have to be a monopoly: and by "ISP" I mean the routing of packets. What tends to be monopolistic in practice is the cabling, whether fibre, twisted pair, or co-ax.

I think that separating the part of current incumbent telcos and cablecos into separate entities, one which runs the physical stuff and the other which runs the packet routing (and telephone and television signals) would go a long way to improving things. At the very least forcing the incumbent

At the very least forcing the incumbents to provide access like they have to do in Canada would be the very minimum for a proper functioning ISP market.

Mod parent up!

I'm a Canadian. Right now I use Bell because my GF wants to keep her Sympatico address. But I miss the days when I had an ISP called TekSavvy, which delivered DSL service via the Bell phone lines, while the phone service on those same lines was provided by Bell.

I wasn't totally satisfied with the service, (though I felt it was way better than Bell's had been), and was about to switch to another ISP when I ended up moving. But that was the beauty of it - I could choose from among several ISP's

In most municipalities, it is impossible to start a small ISP because the city government didn't want to have to talk to more than one supplier of each kind of service. Competition is annoying for bureaucrats, they get two sides making claims and showing evidence, it actually requires work. So much easier to assign a monopoly and approve or reject their requests entirely on personal and political grounds.

There is only one reason for the government to step in: make it easier for smaller ISPs to start shop.

So you don't think the government should step in if the big guys are abusing their monopoly? You don't think the voters in a municipality should be allowed to decide for themselves if they want the government to establish broadband services for their own use? I know it's a popular meme to presume that governments are nothing but incompetent but the reality is that sometimes the government is the best way to get something done. If the existing ISPs find it not worthwhile to serve a population I see no credible argument why the local government couldn't fill that role if the taxpayers want them to. Might not be economically ideal but sometimes perfect is the enemy of good enough.

I'd love to start a small ISP in my area, but it is practically impossible.

Out of curiosity, why? It's a pretty tough way to make a buck. The margins in being an ISP are pretty thin unless you are able to obtain some form of monopoly. If there is any competition the margins plummet but costs don't. Huge fixed costs, lots of customer service, maintenance, etc. Maybe it's your passion but I've started a number of businesses and that is a seriously difficult business to get into. I can introduce you to several people who have actually tried to start an ISP and failed in spite of being well funded.

So you don't think the government should step in if the big guys are abusing their monopoly? You don't think the voters in a municipality should be allowed to decide for themselves if they want the government to establish broadband services for their own use? I know it's a popular meme to presume that governments are nothing but incompetent but the reality is that sometimes the government is the best way to get something done. If the existing ISPs find it not worthwhile to serve a population I see no credible argument why the local government couldn't fill that role if the taxpayers want them to. Might not be economically ideal but sometimes perfect is the enemy of good enough.

My region (the 2M people metro area) is going through municipal broadband fights. They started the fights back in 2002.

The group got an initial rollout in a few of the smaller cities, roughly 11,000 people got hooked up. Then the entrenched monopolies kicked in.
Some highlights:

* Lawsuits from both the incumbent megacorps on cable-based and phone-based Internet on the claim that it was unlawful and anti-competitive for a state agency to compete with an established business. The lawsuits took several years and cost millions. The judges and the appeals court found that government is allowed to provide services, similar to how they provide municipal trash services and still businesses compete; nothing prevents the cable and phone companies from competing if they want.

* Every year state legislators keep introducing new bills prohibiting government agencies from competing with existing businesses, or requiring that governments cannot provide information services to the public without high fees and those fees should go to education, or that any group providing Internet services have so many billions in assets to mitigate risk of disaster, and other variations. Invariably a little research shows the legislators get money from the phone and cable companies, and the company lobbyists vocally support them. The municipal fiber groups have needed to spend several million dollars to fight these as well.

* In a few cities installation was unexpectedly stopped again when some of the smaller cities discovered their own contracts with the megacorps demanded that they couldn't build their own systems until after a multi-year vetting process with the megacorps plus giving them another multi-year opportunity for megacorps to adjust prices and to improve their infrastructure. Basically the smaller city and town governments signed deals for their own cheap Internet that block municipal fiber within their limits for a decade or more. Since then the FCC and other groups have urged cities to be more careful in the contracts they sign.

* Incumbents even got the federal government to drop contracts. In one case they had a contract with the federal government for a $66M under the RUS. After the municipal system had invested and contracted based on that contract it was unexpectedly cancelled. Investigation showed the federal contract was cancelled because the federal RUS system was threatened by the megacorps. A chain of 'smoking gun' emails were discovered where Comcast and CenturyLink demanded the RUS cancel the contract or the two megacorps would act against it; a lawsuit on tortious interference is ongoing, but the cost will be several more million before any ruling will follow, in the mean time the municipal system is out the $66M plus all the interest they need to pay on the emergency loan they had to take out to avoid defaulting on the expenses.

* Because the megacorps have forced the municipal fiber system to spend hundreds of millions on lawsuits and illegally-broken contracts, and because the redirected money has resulted in higher interest rates and longer-term loans costing over $500M to date, they are leveraging it and constantly sponsoring print ads, billboards, and TV ads (on their own cable networks) making nonspecific claims about how the municipal fiber has collected so m

Especially if you don't own the political clout to protect your interests. Case in point, the Telecommunications Reform Act of 1996 and the littered graveyard of start-up broadband firms (well funded based on the rules set down by TRA 96.) The big firms lawyer-ed up and quietly, litigiously fleeced the consumer by crushing upstart competition... There was a time long ago when corporations were distrusted by our elected leaders and corporate charters were limited to ensure they were benefiting the citizen

Municipal broadband = BAD, (the government doesn't have the incentive to succeed that small business must.)Co-Op internet: not a bad idea, but really a form of small business.Giant corporate Broadband = No Competition....

We need smaller providers like WISPs and small FTH providers like golightspeed.com to have some competition.

And what does the government actually do? They give out grants to the big corporate providers at nearly $1000 per home to expand into areas that they don't make money in. Po

Because you can't have the government competing with them in an area that they might, someday, begin to consider serving.

That's not why. It's because they're afraid of getting shown up.

If you have a bunch of people out in the country getting gigabit internet for $25/month while the city folk are still paying $50/month for 1mbps DSL, it makes AT&T/Verizon look either corrupt or incompetent. It also destroys their argument that they can't provide good Internet in the US because of the low population density.

It would reduce the overhead and risk for the ISPs to move into more rural areas if the municipality was footing the bill..... I'm surprised they are not trying to bid on the work of building the infrastructure, operation, and maintenance.

That might be the real reason, but the public reason the big ISPs offer up is "unfair competition" from government - even when the "competition" would be serving an area that the ISP isn't serving. And yet, Comcast and Time Warner Cable claim they aren't competing with each other because they serve different areas.

It also destroys their argument that they can't provide good Internet in the US because of the low population density.

No, it just shows that when you remove the requirement for prices to cover costs and yield a profit, governments can do what private companies cannot. If the existing telecom could cover any operating losses by just dipping into the taxpayer general fund, you'd see prices go way down -- covered by taxes, of course.

And that is what makes government competing with existing private companies wrong. It isn't fair in any sense of the word, and the private companies, even if the courts say they are free to comp

Around here it usually works the opposite, the government delivers cheaper service including running at a lose in some rural places that private business would never service and puts money into the general fund. This is the danger with government infrastructure, they discover they can cut taxes and make up the shortfall by raising prices and pretty soon you're paying almost as much (or in the case of monopoly, more) then private business would charge.If big cable company can charge X, pretty soon some gover

No, it just shows that when you remove the requirement for prices to cover costs and yield a profit, governments can do what private companies cannot.

Funny, because that's also a pretty solid argument as to why the government should be building Internet infrastructure. Private industry is saying, "We can't build the infrastructure necessary for this country to move forward, because it's too expensive." Well, the government can do it then.

But honestly, I'm not even sure that's true. Private industry can waste money like nobody's business with far less oversight, especially when they're providing a service as a monopoly, or part of a cartel.

This is what led the Grant County PUD to begin rolling out fiber to the home in 2000. Now this rural Washington county has gigabit fiber to the home at reasonable rates when much of Seattle is still stuck on DSL or Comcast level technology and rates.

Because you can't have the government competing with them in an area that they might, someday, begin to consider serving.

Yeah, so... don't let them hear this too loudly... one way to get Comcast into a town (where that's the only neighboring monopoly) is to lay out plans on paper to have a market competitor build out a WISP to serve the town. It doesn't even have to be a great-coverage plan and you don't have to have affordable backhaul, but have some public hearings and make sure the papers cover it tho

No, I'm saying that we don't have one and won't have one if the big ISPs get their way. Municipal broadband won't turn a monopoly market into a free market, but towns should be free to decide to do it if they want.

Unfortunately, the major news outlets have long since lost the ability to explain anything of this nature in a factual manner. And since the telecom wield influence over them as well, they aren't likely to help on this one.

Hey, look, I'm cool with however you want to run it. I'm just asking if you have a plan for implementation of whatever changes you want made, or are we just expected to slog along, and keep voting for salesmen, and watch the next 10 or 12 years become a little worse than the last, and hope to be rescued by Harry Potter?

There's no other way to put it. What you have is what you voted for, under the veneer of charisma.

"people"? You misspelled "legislators" - in 2003/4, Qwest (now CenturyStink) and Comcast went nuts and brib^M convinced Utah legislators to abandon the UTOPIA multi-city municipal broadband project, then they began slathering on lawsuits and threats thereof [freeutopia.org].

The fact that a 67-year-old grandmother from Tennessee has more progressive views on municipal internet than a large portion of the rest of the country, or that AT&T stepped in and threatened a 67-year-old grandmother over her attempt to provide municipal internet to her community.

She doesn't have more progressive views than most in the country. This is yet another issue that proves the country is an plutocracy rather than a democracy. In this instance, a few corporations (who Republicans will have you believe are, "people") are buying up politicians and subverting the will of the masses.

It just happens to be one of the more glaring flaws with our campaign finance and electoral systems. And it still can't be fixed.

Being that in most area we have the choice of only one broadband provider. So we are reliant on taking what we can get. If we can have Broadband internet at the Local Town level, vs. State or Federal level. We can have internet and still be close enough to local government to control what goes on.

MaBell on the other hand was just what everyone used in the US. So we had to suck it up and pay for a monopoly.

The thing is with a municipal Internet. the carriers can still dominate the market, as they could the

Seems to me that stakeholders in municipal broadband are a more satisfied lot than the customers of the Telcos (with their paid lobbyists so nicely donating money to the boy/girls scouts to enlist their 'support' for crazy-ass mergers and what-not; nevermind that The Public has Clearly Told The 3 (is it?) commissioners at the FCC to take a flying leap).

"And they've tried to undermine the appetite for municipal broadband by paying for research from think tanks and front groups to portray the networks as unreliable and costly."

So let me get this straight, per the broadband industry municipal broadband is costly and unreliable, but they, meaning AT&T, ComCast, CenturyLink, cannot compete with "Costly and Unreliable". I think this says more about broadband industry than it does about municipal broadband.

It's funny that when a free-market proponent says government monopolization of some good or service "crowds out" for-profit competition we get called names. It's also funny that when we point out that these companies with government sanctioned monopolies aren't really operating in a free-market environment we get accused of using the "no true scotsman" fallacy.

No one I know says this. It should pretty cleanse that telecoms, cable, are not functioning in any Market. As you correctly say they are local government monopolies whic are further protected by the states, for stupid and nonsensical reasons.

You hang out with people who have more than typical insight, then. I hear a lot of this kind of thing from people. Mostly, but not exclusively, who are left-leaning, and who also blame the banking crisis on "the free market".

After repeated bailouts, they didn't have to. It was largely assumed that the boys' club would take care of each other. And indeed it has, for TBTF banks that received bailouts enjoyed discounts on their interbank borrowing after they were bailed out, because their creditors knew the central bank would make good on any bad loans. Small banks actually operate at a disadvantage because the assumption is they WON'T get bailed out unless they're big enough for "systemic risk". Also, the whole Federal Reserve fr

Oh, you took took "libertarian" and "retard" and put them together. You're smart. Now, explain to me in what FREE MARKET is there an incentive for private firms to bail out banks for making bad loans? That you can't see that only in a market with SIGNIFICANT GOVERNMENT INTERVENTION AND BIG BANK FAVORITISM would that happen indicates a severe problem in your perception.

Government bailouts of big banks are NOT a feature of free markets. Big banks failures that put the banks out of business ARE a feature of free markets. Banks making bad bets can happen in either scenario.

It comes from the fallacious belief that non-government created monopolies leveraging their position will face competitors who can "do it for less". The truth is that infrastructure just isn't that conducive to competition. Who'd want 3 different water/sewer systems connected to their house?

The truth is that infrastructure just isn't that conducive to competition.

Heh, just ten years ago I heard people saying that - shortly before Comcast offered phone service and before Verizon offered TV service. Both cable TV and telephone were "natural monopolies" before they weren't. To offer that Verizon had to replace their entire cable plant and Comcast had to replace much of it. What they didn't have to do was go through an extremely expensive political and regulatory process to get access to pole

Yeah, but we know from relatively basic studies of economics, (varying) on the exact elasticity of demand, that any sort of sane monopoly tends to price somewhere in the range of double to triple what a competitive market would.

Oh yeah. Bring up phones. Those land-lines have REALLY gotten more reliable and useful in the last 60 years haven't they? I mean, look at the horrible phone track records for emergency service and reliability in 1954 after all.

> It's exactly the same calculation for anything anybody calls a 'natural monopoly'. Absent an interfering government, the money flows to the best service provider.

I suppose that's why municipal water is so expensive, unreliable and horrible in the US, whereas such an "incredibl

I think the fact that the land line providers were granted privileges (right of way, regulatory capture) by the government is a good example of what I referring to in my original post. Your apparent lack of comprehension is a pretty good example of the kind of behavior I was describing precisely in the second sentence.

I'm currently forced to buy water from only the local government-granted monopoly water provider, who has decided not to provide one type of water I want to purchase (greywater) to residential customers. They sell it to commercial customers at1/10th the cost of their potable water lines, but despite the fact that the pipes and infrastructure supporting it are literally 2 feet from my property, I'm classified as residential, so n

The subject under discussion is broadband. Try to pay attention. And, yes, municipalities do prohibit competition through sleazy deals with all-too-eager providers. In those areas where there are no contractual monopolies, lower rates, better service and higher consumer satisfaction are the norm. The reason why there is only one choice in so many locations, like mine, is because local government has sold the monopoly rights. http://www.wired.com/2013/07/w... [wired.com]

What galls me the most is the panty-wetting over a government-granted monopoly trying to maintain its government granted monopoly when that very same government tries to compete using taxpayer dollars as a subsidy.

The outrage should be against government involvement period. If governments didn't grant local monopolies, there would be real competition among the real companies, and no perceived need for the government competition which is only competitive because it has the taxpayer subsidy.

Municipalities providing a critical infrastructure? What Lunacy! That will never work! What other crazy ideas do these municipalities have in store for us? Electricity? Running water and sewage? Gas heating? Paved roads? Balderdash! Best to leave these things to the large corporations and eliminate all of the regulations since they have nothing but the public's best interests at heart. To the free market fairy we pray for forgiveness. Amen.

Free wi-fi municipal networks are springing up in Brazil since at least 2009. Nonetheless, as these networks are intended for public access to government services, people still buy 30Mbit+ broadband connections for their homes from the big telcos.